Emergent Research

EMERGENT RESEARCH is focused on better understanding the small business sector of the US and global economy.

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The authors are Steve King and Carolyn Ockels. Steve and Carolyn are partners at Emergent Research and Senior Fellows at the Society for New Communications Research. Carolyn is leading the coworking study and Steve is a member of the project team.

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Emergent Research works with corporate, government and non-profit clients. When we reference organizations that have provided us funding in the last year we will note it.
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Assistant Edge

Contingent Workforce

December 11, 2017

According to a recent survey by the global HR services company Randstad, "More than half of global human capital leaders expect to transfer one-third of their permanent positions to contingent roles in the near future ..."

More than 700 global human capital leaders responded to the Randstad survey.

The study press release has an interesting quote on the growing role contingent talent is playing:

"Companies are increasingly embracing gig workers, and even robots, in their overall workforce to address the increasingly tight labor market in the U.S. and around the world," said Rebecca Henderson, CEO of Randstad Sourceright. "While in the last decade contingent workers have been viewed very differently as compared to full time positions, today's companies are welcoming the opportunity to employ a more agile workforce, particularly as a greater number of gig workers embrace flexible work practices as well."

The report also cites talent scarcity as a major issue and one of the reasons companies are turning to contingent workers.

69% of the respondents said the talent gap is widening and will create greater challenges in the near future, while 25% consider talent scarcity to be their largest concern.

In response, corporations are looking far and wide for needed talent. 74% of those surveyed believe the right person for the job may be an employee, contractor or contingent worker from anywhere in the world.

Many companies are also increasing their training efforts. About half of the respondents said they've increased budgets for their training and reskiling programs.

None of this data comes as a surprise. But it's another confirmation of the trend towards the growing use of contingent labor by corporations.

"the growing adoption of artificial intelligence in the workplace and the expansion of the workforce to include both on- and off-balance-sheet talent."

As their chart below shows (click to enlarge), they see the future workforce being made up of four types of workers.

More interesting is their view about how the relationship between corporations and off-balance sheet workers is going to evolve.

They see corporations hiring two broad types of independent workers. One group - the transactional remote worker - is hired for short term assignments, often through an app or some 3rd party platform. Think hiring people via Amazon Turk to categorize pictures, etc.

The other group - outside contractors - will increasingly work on hybrid teams with traditional employees.

These outside contractors will also tend to stay connected with their client organizations for longer periods of time. Key quote:

As the alternative worker shifts to more rapidly evolving work, the way that work is done is likely to change, moving from short-term transactional remote worker to longer-term relationships that help to accelerate learning and performance improvement.

November 21, 2017

It has some very interesting data on small businesses and their use of gig workers.

According to the report:

Business owners reported a 37% increase in hiring gig workers over the past six months, compared to increases of 13% for full-time employees, 22% for part-time employees, and 12% for part-time independent contractors.

19.8% of businesses surveyed reported replacing employees (of any type) with contractors over the past six months.

47% of non-employer/solopreneur firms reported hiring part-time workers and/or contractors to help run the business, for an average of 3.2 workers, including the owner.

The top reasons small businesses are hiring contractors and gig workers is shown in the SCORE chart below.

Most people we talk to think cost is the main reason people use gig workers.

But as the chart clearly shows, cost issues are well below accessing specialized talent and the small business only having temporary needs.

Field service is another industry with lots of on-demand gig workers. Platforms like Field Nation, Work Market, OnForce (recently acquired by Work Market) and others claim to collectively have over 600,000 independent field service technicians working via their sites.

October 31, 2017

Ardent Partners recently released their 2017-2018 State of the Contingent Workforce Management report. Ardent Partners is an analyst firm focused on corporate procurement and supply chains.

The report is targeted at procurement and HR professionals who manage contingent workforce programs at larger organizations. This is the 5th year of this study on the use of non-employee talent by corporations.

The lead finding of the study is that roughly 40% of today’s total, corporate workforce is considered contingent, including temporary labor, professional services, independent contractors and on-demand workers.

But what we found most interesting is the list of the top contingent workforce management challenges.

As the report chart below shows, the desire to be more agile and the need to find, engage and source talent are the top challenges.

The resulting corporate "need for speed" means that companies have to be able to quickly staff up and down, often with hard to find talent. These needs have reached the point where corporations have no choice but to increase their use of contingent talent.

Also interesting is that reducing cost has fallen to 5th on the challenges list. Four or five years ago, it would have been first.

The reason is contingent workers at corporations no longer just do low level or low skill work. Key quote from the report on the growing strategic role contingent workers play:

It is important to note that these are not augmentative, supplemental workers, as today’s non-employee workforce plays a critical role in how mission-critical work is handled, addressed, managed, and completed.

Because contingent talent is involved in mission-critical work, cost is less of an issue.

This also explains why the need to find, engage and source talent is number 2 on the challenges list. If you're in need of mission-critical talent, how you find and engage that talent becomes much more important.

BTW, this is not to say cost isn't an issue. But what is happening is contingent labor is bifurcating into two types. For mission-critical talent, cost is not a key issue. For non mission-critical talent, cost remains an important issue.

Ardent is forecasting continued growth for the contingent workforce. They are also recommending corporations should embrace contingent talent and see it as part of their broader total talent pool. Again from the report:

Today’s total talent pool consists of a variety of skillsets: independent contractors, freelancers, professional services, “gig” workers, robotics, and, of course, traditional/permanent workers. A perfect alignment between an open job/project and the internal or external skills within the enterprise talent pool is the ideal way to address work.

This approach to talent is clearly emerging, both in large corporations and small businesses.

September 26, 2017

The "Big 4" accounting and consulting firm EY recently announced GigNow, an advanced technology platform that sources and matches qualified independent workers with projects at EY.

Key quote on why EY developed GigNow:

“The trend of contract professionals demanding more flexibility to support new types of career paths is upending the way we find and engage talent. At EY, we see this as a strategic imperative to transform the way we attract the best talent for short-term assignments, especially during bursts of business activity. The launch of GigNow enables us to systematically engage the right talent, for the right opportunities at the right time.”

Key quote on GigNow's impact on contractor hiring at EY:

"With GigNow, the number of people working as contractors on short-term assignments at EY is expected to grow significantly over the next several years ..."

EY also announced EY Badges, a certification program that will allow EY employees "the ability to digital credentials in skills that differentiate them in the market, such as data analytics, AI, data transformation and information strategy."

Key quote on earning Badges:

Badges will be earned based on the same standards around the world – through world-class learning, fulfilling required experiences and making a contribution to the broader community, such as coaching colleagues, presenting to clients or publishing an article that educates others about the acquired skill. There will also be four levels of badge distinction (bronze, silver, gold and platinum), with defined criteria to be met in learning, experiences and contribution to earn each badge.

It's not clear from the announcement whether or not GigNow contractors will be able to earn Badges. But given the other announcements, it's likely this will happen.

And being certified by a firm like EY has obvious advantages to independent workers.

This study found that a bit over 40% of working adult Americans had spent some of their career working in a traditional job and working independently. The trend on this has been consistently upward since the study was first started in 2011.

The related prediction that independent work (freelancing, independent contracting, etc.) will become more episodic is also based in part on data from the State of Independence study.

This data shows that over the study time frame (2011-2017), the number of people who moved between traditional employment and independent work consistently has increased.

An example is the data showing a slight decline in the number of full-time independent workers over the past 2 years. This is due to the strong traditional job market attracting people back to traditional employment.

Most of the returnees are "reluctant independents", who are people who prefer traditional employment but were working independently for various reasons.

But some of the returnees are people who are going back to a traditional job to gain new skills or are attracted by new opportunities.

At the same time, others are leaving traditional jobs and becoming independent. These folks are attracted by the autonomy, control and flexibility independent work provides.

The cycling back and forth between traditional jobs and independent work is part of a broader shift towards what LinkedIn founder Reid Hoffman calls "tours of duty".

These are 2-4 year assignments between a company and an employee with the expectation that many will leave the firm for other opportunities at the end of a tour.

Th break down of the traditional social contract between corporations and employees is leading to growing numbers of firms turning to tour of duty type assignments. Employees are also increasingly realizing they're effectively "free agents" even if they have a traditional job.

These shifts leading to more people spending some of their career as independent workers, even if they prefer traditional employment.

We certainly agree with MBO Partners that independent work will increasingly become episodic. So will traditional employment.

September 19, 2017

It nicely covers the topics mentioned in the report title. Key quote from the report on the size of the "human cloud":

"SIA estimates that total human cloud spending reached between $47 and $51 billion globally in 2016. The business-to-business (B2B) segment of the human cloud grew approximately 20% year-over-year, with remote work arrangements accounting for 80% of human cloud revenue and highlighting flexible work location as one of the benefits of the human cloud.

The report is excellent and well worth reading. We particularly liked their definitions and their human cloud framework and taxonomy.

The SIA defines the human cloud as:

... an emerging set of work intermediation models that enable work arrangements of various kinds to be established and completed (including payment of workers) entirely through a digital/online platform. In many cases (although not always), the platform also supports "the enactment and management" of the work (to a greater or lesser degree).

SIA does not include job boards or social networks in their definition because they don't enable or support work arrangements through to their completion.

The attendees were senior HR, procurement and business unit leaders from major corporations.

The summit sessions and informal conversations provided an excellent opportunity to hear from a variety of corporate executives on why they are increasing their use of contingent labor, especially through the use of online talent marketplaces like Upwork.

Three key drivers were consistently cited:

1. The need for speed: Pretty much all the participants agreed that their organizations needed to move faster. They also agreed that the use of outside talent often resulted in the faster delivery of results than other alternatives. They felt this particularly true if the required deliverable was a discrete, specialized task - which brings us to driver #2.

2. Work is shifting from jobs to tasks: Companies are chopping up jobs into bite-size tasks and giving them to the best person available. That person could be could be a traditional employee, or it could be a outside contractor. Increasingly, it's an outside contractor.

This is due to the outside contractor having specialized skills, or simply being available. With organizations choosing to run lean, often internal employees don't have the bandwidth to take on new tasks. This means the fastest way to get the work done (driver #1) is to use outside talent.

3. The need for external teams: This may seem paradoxical given driver #2, but it's not. Firms are increasingly looking to outside contractors to provide completed projects. These projects often require a team of people with specialized skills to complete a variety of tasks.

This is leading to more independent workers to create either formal or ad hoc teams that can bid on larger and more complex projects.

Often these projects are sub-projects in a broader task. For example, building a marketing app as part of a new product roll-out. This task requires a team to accomplish, but is simply one of many tasks required to complete the entire project.

Interestingly, none of these drivers are new.

But technology - and especially technology for managing distributed workers and teams - has reached the point where these these shifts are happening at an accelerating rate.

Also interesting is how corporations are reacting to these drivers.

As with any major change, they are starting small.

Most of the firms attending the event are still in the experimental stage, building pilots and developing high ROI use cases.

But it was clear from our conversations that these firms are seeing strong results from their pilots. Most are already moving beyond experimentation into broader deployment, or planning to do so quickly.

August 14, 2017

The U.S. Federal Reserve released the their Report on Startup Firms. This is the second in a series of reports based on their 2016 small business credit survey.

The focus of the report is credit experiences of startups with employees, which they define as firms 5 years old or younger that have at least one traditional full or part-time employee.

Startup firms make up about one third of small employer firms. They tend to be smaller, less profitable, but faster growing than mature small businesses (those who have been in business more than 5 years).

There's a lot of interesting data in the report. But one set of data really jumped out at us.

According to the study, 42% of small startup businesses use contract labor. Also interesting is the median number of contract employees at startup firms is 3.

This is interesting because the median number of traditional full and part-time employees at startup firms is also three.

This means contract workers are possibly about half the workforce at young small businesses.

We say "possibly" because the survey didn't go into detail on how much contract workers are working at these firms. It also didn't go into detail about the split between part-time and full-time workers at these firms.

So there's no way of knowing from this data what share of the firm's work is done by contract workers.